CBN cuts MPR to 23% after holding rate at 26.5%

The Central Bank of Nigeria (CBN) has cut the Monetary Policy Rate (MPR) by 350 basis points to 23% from 26.5%, following the 307th meeting of the Monetary Policy Committee (MPC) in Abuja.

The decision was taken at the meeting, which had 11 members in attendance.

Alongside the reduction, the committee recalibrated the Standing Facilities Corridor and retained existing Cash Reserve Requirement (CRR) levels for Deposit Money Banks, Merchant Banks and non-TSA public sector deposits.

The decision follows the MPC’s July 2026 meeting, when the benchmark rate was retained at 26.5%.

CBN cuts MPR to 23% from 26.5%

The reduction marks a 350-basis-point adjustment in the CBN’s benchmark interest rate, bringing the MPR from 26.5% to 23%.

• The decision was reached at the 307th MPC meeting held in Abuja, with 11 members of the committee in attendance.
• The rate had remained at 26.5% after the MPC retained it at its July 2026 meeting.
• The latest decision therefore represents a change from the position maintained at that meeting.

The supplied information identifies the MPR reduction as the central outcome of the meeting, alongside adjustments to the standing facilities corridor and the retention of reserve requirements.

The CBN’s Governor, Mr Olayemi Cardoso, was identified in the supplied material, although no statement from him explaining the committee’s decision was included.

The rate cut is also being considered against the backdrop of inflation, which stood at 15.39% in August 2026, according to the data provided by National Bureau of Statistics.

The reduction in the benchmark rate is expected to have implications for borrowing costs, bank lending, investment and economic activity as the CBN seeks to improve monetary policy transmission.

CBN retains banks’ cash reserve requirements

While reducing the MPR, the MPC retained the Cash Reserve Requirement for the different categories of banks and public sector deposits.

The CRR determines the portion of deposits banks are required to keep as reserves with the CBN.

The committee maintained the following requirements:

• Deposit Money Banks will continue to maintain a CRR of 45%.
• Merchant Banks will retain a CRR of 16%.
• The CRR on non-TSA public sector deposits remains at 75%.

The committee also recalibrated the Standing Facilities Corridor to +50/-300 basis points around the new 23% MPR.

This places the Standing Lending Facility at 23.5% and the Standing Deposit Facility at 20%.

The corridor adjustment aligns the standing facilities with the revised policy rate and is intended to guide short-term money market rates.

The unchanged CRR means banks will continue to maintain the specified reserve levels even as the benchmark interest rate is reduced.

New MPR comes amid August inflation

The CBN’s latest decision follows its July 2026 meeting, when the MPC retained the MPR at 26.5%, alongside the existing CRR levels for Deposit Money Banks, Merchant Banks and non-TSA public sector deposits.

• The reduction to 23% comes amid an August 2026 inflation rate of 15.39%, according to the figure supplied for this article.
• The new policy rate is therefore lower than the previous 26.5% benchmark, while remaining above the reported August inflation rate.
• The decision could have implications for borrowing costs, bank lending, investment and economic activity, although the supplied material does not quantify the expected effects or provide a forecast for lending rates.

The MPC’s other policy settings remain differentiated across categories of banks and public sector deposits, with the standing facilities corridor adjusted around the new MPR.